Withholding partnerhship bank account on request of one partner when deed provides for joint opertaion of bank account by any two partners.

Accountant & Tax Consultant

Parntership Firm is having three partners.  The bank accounts are to be operated by the signature of any two partners jointly as per partnership deed clause.  One partner writes to banks mentioning that their is some misunderstanding and requests to stop accounts operations.  The banks immediately freezes the accounts, accepts the deposits of cheques but dishonors the issued cheques with the signature of two partners.  The bank intimates the other two partners after lapse of 3, 4, days period.  The partner who writes to bank do not intimate the other partners.


Under the circumstances whether bank has acted correctly?


Will the firm be liable for 138  acion?


What is the legal remedy?


yes what  the bank has done is in accordance with the banking rules. any one of the partners of the firm can stop the operation of the bank account whenever there is a dispute, though the account  is operated on the signature of other two partner.  bank is bound to act upon such intimatioin and can stop payment of cheque. At the time of opening the Account, the bank takes the signature of all the partner, all of them have signed the terms and conditions.  Mode of  operation of the account eiher single or joint or by all is for the sake of the  firm. the only remedy is to dislove the dispute among the partner and give a letter jointly to allow for the operation of the account.



Sec 138 is attracted only when cheque is returned for want of sufficient funds in the account. Since u may be having balance in the account this clause will not be attracted. Bank also would have returned cheques for proper reason other than funds insufficient or "not arranged for "if U are having credit facility. 

advocate/legal consultant

it doesnt amount to dishonour of the cheque.dishonour is incomplete.cheque hasto be returned by the banker with an endorsement insufficent funds. 

Commercial Manager

Dear Sir,

We are having three partners firm and simple cluase of Arbitration is inserted therein in the deed. That any disputes arbitration will be appointed and the decision will be final ..... under Arb  & C. Act 1996 ( 26 ot 1996) etc. etc. I was involved after 2/3 months and have equal partnership.

Now since first other both partners are on operating CLCSS Loan  & CC Bank Account and I am no where involved in it. My question is :

1) If any disputes arises, can I freeze the account ? How and under which cluase ?

2) The new Part. Deed is already with Bank and Bank have increased Loan amount by mortgaing my flat after 8 months of partnership.

Why Bank does not insist that any two partners out of three signature on cheque will be allowed. Righnow only two signatures are only allowed but both and not any two out of three ?

Every stock statement and all other Bank documents insists all three partners signature.

I am active and have started this project by my own but due finance shortage  I got delayed in involving myself i.e. only 3 months. Now the firm is opertaing fine since Jan 2016 and making profit, I am looking after all operation in the factory.

What are my rights as I am not signatory in Cheque of Banks transaction, though nothing mentioned in Part. Deed.

Kindly advice 






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